Question

Chapter 9: Receivables

Initial Post

Part 1 (Use the annual report of your selected company) my company is Facebook

What are the three classifications of receivables? Which does your company have? Look in the notes to the financial statement to find out which method they use for writing off receivables.

Part 2

Dan's Hardware is a small hardware store in the rural township of Twin Bridges. It rarely extends credit to its customers in the form of an account receivable. The few customers who are allowed to carry accounts receivable are long-time residents of Twin Bridges with a history of doing business at Dan's Hardware. What method of accounting for uncollectible receivables should Dan's Hardware use? Why?

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Please make sure that your initial post contains a properly cited references. Please use APA style. You should cite your text as a minimum. Also, please include the link to your company's annual report. Additionally, check your spelling and proofread your post before you hit the submit button.

Answer 1

Part 1

Annual Report of Facebook Company

The annual report illustrates the financial overview and status of the company and provides investors and shareholders with data about the company's earnings and spending.Here we are discussing about the annual report of Facebook Company's classifications of receivables and writing off receivables.Annual reports provide information on the company's mission and history and summarize the company's achievements in the past year. While financial achievements are included, other achievements also are noted, such as research advances, market share gains or honors awarded to the company or its employees.The financial statements are the most important part of the annual report that allows current and future investors, shareholders, employees and other business stakeholders to determine how well the company has performed in past, its ability to pay off its debts and its plans for growth.The statements most companies will include are: the consolidated balance sheet, the income statement, the statement of cash flows and the statement of shareholders. Some companies will include more financial information depending on their industry and size.

Facebook is one of the social media company in the world ,the founder of the company is Mark Suckerbergg , Facebook products empower more than 3 billion people around the world to share ideas, offer support and make a difference.Here pointing about the receivables classifications.Receivables can be classified as accounts receivables, notes receivable and other receivables ( loans, settlement amounts due for non- current asset sales, rent receivable, term deposits).The three major types of receivables. Accounts Receivable - represents to receive cash in the future from customers for goods sold or for service performed. Note Receivable - represents a written promise that the customer will pay a fixed amount of principal plus interest by a certain date in the future.Other Receivables means those receivables or other rights to receive payments that meet all of the requirements of an “Eligible Receivable” but the obligor is not an Acceptable Obligor.An example of accounts receivable includes a telecom company that bills its clients after the clients received the services. The telecom company records an account receivable for unpaid invoices as it waits for its customers to pay their bills.

Receivables, also referred to as accounts receivable of Face book company, are debts owed to a company by its customers for goods or services that have been delivered or used but not yet paid for.Accounts receivable are the lifeblood of a any business's ,cash flow.Facebook business's accounts receivable are an important part of calculating its profitability, and provide the clearest indicator of the business's income. They are considered an asset, as they represent money coming into the company.Facebook Inc Receivable turnover ratio sequentially improved to 9.41, above company average. Average receivable collection period, for the Facebook Inc in last quarter, has decreased to 39 days, compare to 40 days, in the previous quarter.Within Technology sector 277 other companies have achieved higher receivables turnover ratio. While receivables turnover ratio remained unchanged compare to previous quarter.A ratio that measures company's ability to collect the loans (Accounts receivables) it has provided to its customers by dividing revenus by accounts recievable. High ratio indicates that company efficiently collects it outstanding recievables.

Accounts Receivables Turnover Ratio Formula = (Revenue / Receivables)

One frequent use for the write-off occurs when a seller's accounts receivable assets Note that inventory can lose value through obsolescence, changes in market , they use various means to encourage the customer to pay (see Bad Debt). When the period includes a bad debt write off, however, the Income statement.The direct write-off method is simpler than the allowance method in that it allows for one simple entry to reduce accounts receivable to its net realizable value. The entry would consist of debiting a bad debt expense account and crediting the respective accounts receivable in the sales ledger.he principal part of a note receivable that is expected to be collected within one year of the balance sheet date is reported in the current asset section of the lender's balance sheet. The remaining principal of the note receivable is reported in the noncurrent asset section entitled Investments.

A write-off is an elimination of an uncollectible accounts receivable recorded on the general ledger. An accounts receivable balance represents an amount due to,If the individual is unable to fulfill the obligation, the outstanding balance must be written off after collection attempts have occurred.When a specific customer's account is identified as uncollectible, the journal entry to write off the account is: A credit to Accounts Receivable (to remove the amount that will not be collected) A debit to Allowance for Doubtful Accounts (to reduce the Allowance balance that was previously established).Under the direct write off method, when a small business determines an invoice is uncollectible they can debit the Bad Debts Expense account and credit Accounts Receivable immediately. This eliminates the revenue recorded as well as the outstanding balance owed to the business in the books.But Facebook is a larger company it use the direct write-off method is simpler than the allowance method in that it allows for one simple entry to reduce accounts receivable to its net realizable value. The entry would consist of debiting a bad debt expense account and crediting the respective accounts receivable in the sales ledger.